gift planning newsletter

“�Penn�State�Recognizes�Our��Potential�for�Excellence”�

“I’m now a graduate student in the

Engineering Science and Mechanics

Department,” Tony says, “and I know I

made the right choice. The best education

doesn’t come from books—it comes from

hands-on learning experiences.”

One of those hands-on learning

experiences was an extensive research

project for which Tony was chosen by

his math professor, Dr. Corina Drapaca.

“She saw potential in me,” Tony says

about his professor. “She is someone

who truly believes in going the extra

mile to help out her students, and that’s

something that I’ve found to be true of

all Penn State professors.”

As Tony was excelling at Penn

State, his family began to struggle with

the combination of their day-to-day

expenses and Tony’s college costs.

“When my family was experiencing

financial challenges, I approached the

Schreyer Honors College and explained

my situation. They had trust in me and

agreed to help. It reduced a burden on

my family,” Tony explains.

Without the scholarship, Tony would

have been forced to apply for high-

interest loans from private institutions

because he didn’t qualify for additional

federal assistance. His scholarship quickly

extinguished his escalating financial

concerns and will make it possible

for him to tackle his dreams

immediately after graduation.

Tony is finishing up his

master’s degree and, after

graduation in May, plans to

commission as an officer in the

U.S. Army and work in the Army

Corps of Engineers. He hopes to

one day have the opportunity to

give back to Penn State. Tony says,

“Scholarships and endowments boost

Inside This Issue...

How we attract the best and

brightest to Penn State

Important tax law changes

for 2011

Make a difference at Penn State

and receive payments in returnRemembering Penn State

Alumnus�Remembers�MotherWith Scholarship for Students Who Have Lost a Parent

When children lose their mother or father, they can lose the chance to pursue their educational dreams, too. Alumnus Stephen S. Showers knows firsthand how hard it can be for these students to afford a college degree, and he has committed to an estate gift of $250,000 for a University-wide scholarship that will assist families facing the emotional and financial consequences of a parent’s death.

“I was 7 years old when my father

suddenly passed away, and my mother,

Lucille, was faced with supporting our

household on her own,” says Stephen, a

native of Lewistown, Pennsylvania. “She

knew that a college degree would be

important to my future, and she saved

as much as she could for my education.

I would not have been able to enroll at

Penn State, however, if she hadn’t found

a Pennsylvania Senatorial Scholarship

for me. I am creating this endowment

to honor her.”

A 1966 Penn State graduate,

Stephen earned a dual master’s degree

in Education Administration and

Counselor Education from Colorado

State University and returned to Penn

State for his doctoral studies. In 2009,

after a long career in higher education,

he retired from Towson University,

where his posts included associate vice

president for facilities management and

interim vice president for administration

and finance. He continues to live in

Towson, Maryland, with his wife, Tate.

“Through my work, I’ve had

the opportunity to create a better

educational experience for thousands

of students, and that has been deeply

rewarding,” Stephen says. “Now I want

to make a difference for Penn State

students. This scholarship is not aimed

at applicants who have the highest

GPAs and test scores. It is directed to

undergraduates who have a strong desire

Penn�State�Office�of�Gift�Planning

our confidence as students and drive

us to achieve more. …One day, we

will repay this gratitude by helping

the next generation of students who

are struggling with rising college costs,

and we will pass on the torch for

generations to come.”

Michael J. DegenhartDirector, Office of Gift Planning

Brian S. CaseyGift Planning Officer

Brian J. McCullough, Esq.Gift Planning Officer

Kristine K. Otto, J.D., Ph.D.Gift Planning Officer

Patricia L. Roenigk, Esq.Director, Individual Gift Planning

Thomas L. ParrishAssociate Gift Planning Officer

Jeanne M. SalladeAssistant Director, Gift Planning

Terri L. AssaelGift Planning Assistant

Office of Gift Planning214 The 103 Building University Park, PA 16802

814-865-0872 Toll-free: [email protected]

www.giftplanning.psu.edu

Gift�Planning�Newsletter

Supplement�Retirement�Income��

In return for establishing a charitable gift

annuity, we agree to make fixed annual

payments to you for life. Assets that

remain after your lifetime help support

Penn State programs and students.

Example: Ruth, age 70, establishes a

$10,000 CGA with Penn State. Based

on her age, she’ll receive a fixed rate

of 5.8 percent, with annual payments

of $580. She’s entitled to an income

tax charitable deduction of $3,115,*

and $444 of each payment will be

income tax-free throughout Ruth’s

estimated life expectancy.

* Assumes annual payments and a 2 percent charitable midterm federal rate

With a Penn State Charitable Gift Annuity

How�It�Works: A charitable gift annuity (CGA) is a contract with Penn State in which you agree to make an irrevocable gift of cash or marketable securities—so your gift doesn’t have to come straight out of pocket.

The�Older�You�Are,�

The�Higher�The�Rate

65� 70� 75� 80� 85� 90+Age

e 9.5%

5.5% 5.8%6.4%

7.2%8.1%

Remembering Penn State

YOU’RE�INVITED!�The Atherton SocietyIfyouhavechosentosupportthefutureofPennStatethrougha

plannedgift,youjoinagroupofsupporterswhosharealove

andvisionforourmissionand,moreimportant,ourstudents.

WecallthisinspirationalgroupTheAthertonSociety,named

forGeorgeW.Atherton,PennState’sseventhpresident,and

hiswife,Frances.Theireffortslaidthegroundworkfortoday’s

achievements,muchlikeyourgiftsdotoday.

How�to�Become�a�MemberMembershipisofferedtoallindividualswholetusknowthey

includedPennStateintheirestateplansorasabeneficiary

ofanothertypeofplannedgift.Welookforwardtoproperly

thankingyou.Werespectyourwishestoremainanonymous,

ifyousochoose,andanydetailsofyourgiftthatyoudisclose

areheldinstrictestconfidence.

Toseeano-obligationpersonalizedillustrationofyourpotentialbenefits,give

usacallorreturntheenclosedreplycard.Youcanalsoreadmoreaboutgiftannuitiesandfigureyourownbenefitsonlineat www.giftplanning.psu.edu/cga. to succeed and who do not have two

parents at home to help.”

Stephen has worked with Penn State

to prepare a letter to be shared with

recipients of the Stephen S. Showers

Scholarship. He says, “I hope that by

learning a little more about my mother

and what she helped me to achieve,

students will be inspired to seize the

opportunity that Penn State offers and

make the same opportunity possible for

future students.”

Antony Palocaren

Gift Planning NewsletterWINTER 2011

When Antony Palocaren chose to attend Penn State, he focused on the value of the academic programs and the proximity of the University to his home in West Mifflin, Pennsylvania. What he didn’t learn until later was just how much Penn State valued him.

Stephen S. Showers

WHAT�IT�TAKES

PLANNING�NEWS■ Endowed scholarship. An endowment

is funded first, and then the income

it earns is used to provide students

with funds. The principal remains

untouched so the endowment

lasts forever.

• The annual gift tax exclusion—the

amount you can give to anyone gift tax–

free each year—will remain at $13,000 in

2011 ($26,000 for married couples).

• The carryover cost basis tax structure

for inheritors in 2010 has also expired,

which is good news. So unlike 2010, in

2011, beneficiaries inherit most assets at a

Every year, we lose talented, dedicated

students because of the cost of a Penn

State degree, which is why scholarships

are our top campaign priority. With the

help of alumni and friends like you, we

can ensure that our opportunities remain

accessible for students whose means

may be limited but whose ability and

ambition are limitless.

Scholarship�OpportunitiesYou can establish two basic types of

scholarships:

■ Annual scholarship. This award

provides the student with funds that

are completely disbursed or liquidated

in a single academic year. The

scholarship may also be renewed with

ongoing commitments from you.

What�Does�This�Mean��For�You?Most of us know that we need an estate

plan to determine who gets what from our

assets when we are gone. Plus, we know

that without a valid will, we are leaving

it up to the state to determine who gets

the majority of our assets and belongings.

With the estate tax exemption increased to

the $5 million mark, for many of us, estate

tax planning won’t be so necessary right

now. The important part is deciding who

gets what from our estates.

Other�Major�Federal�Tax��Law�Changes�for�2011• The exemption level for generation-

skipping transfer taxes is also $5 million,

with a federal tax rate of 35 percent.

To Attract the Best and Brightest to Penn State

Will 2011 Tax Law Changes Affect You?

To Make a Difference at Penn State

Nothing we do to improve the quality of a Penn State education through the For the Future campaign will matter if students and families can’t afford the opportunities we offer.

The beginning of a new year brings new changes to federal taxes, specifically estate taxes. Last year, federal estate taxes were repealed, meaning that everyone who died in 2010—regardless of how wealthy they were—didn’t pay any federal estate taxes. As of January 1, 2011, if your estate is worth more than $5 million when you die, called the basic exemption level, it may be subject to estate taxes as high as 35 percent.

Never become so engrossed in legal and tax complexities that you lose sight of the people and charitable organizations you want to help. If you believe in what we do and you’d like to save on federal estate taxes—or even if estate taxes aren’t an issue—consider leaving a gift to Penn State through your estate plans. Here are two flexible ways to leave a lasting legacy, each of which can be used to support student scholarships or whichever Penn State program is closest to your heart.

Penn State students are graduating

with an average�personal�debt of more than $28,000.

Leave a gift (called a bequest) to us in

your will or revocable living trust. You

can leave us a specific asset, a specific

dollar amount, or, more commonly, a

percentage of the residue of your estate,

and you can change your mind any

time should circumstances change. To

include a gift in your will, contact us

or visit www.giftplanning.psu.edu/

bequestlanguage today to get official

language to share with your attorney.

Name Penn State as the beneficiary

of a percentage of your IRA or other

retirement plan assets. This simple

option also allows you to change your

mind at any time, and all you need to

do to put your gift in motion is request

a change-of-beneficiary form from your

plan administrator. You’ll make a big

difference to our students after your

lifetime while saving your loved ones

nearly 60 percent in taxes.

Once you decide to make a scholarship

gift, you have many choices. You

can choose the assets to donate, the

guidelines used to select the recipients,

the scholarship name, and much more.

ESTATE PLANNING TIPS TO HELP YOU ACHIEVE YOUR CHARITABLE GOALS

TAX-SMART�WAYS

The information in this publication is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.

To learn more about making a gift that lasts forever, contact the Office of Gift Planning or visit www.giftplanning.psu.edu/endow.

The�Math�Behind�an�Endowed�GiftEvenifit’sbeenawhilesinceyouopenedatextbook,youshouldhavenotroubleunderstandingthecalculationbehindanever-endinggifttosupportPennStatestudents.

How�It�Works:�An�ExampleLet’ssayyouwouldlikePennStatetoreceive$1,000ayeareveryyearafteryourlifetime.PennStateonlyspends4.5percentofanendowment’svalueannually.Therestisreinvestedintheendowmenttooffsetinflation. Tocalculatetheamountneededtoperpetuateyourannualsupport,dividetheamountyouwishtogiveeachyear($1,000)bythepercentageoutlinedinthespendingpolicy(4.5percent).Theresultisthesizeoftheendowmentthatisneeded—inthiscase,approximately$22,000.

Two�FREE�Guides!ReturntheenclosedreplycardtodaytoreceiveExtending Your Penn State Pride Forever,aguideonsettingupascholarshiporotherendowmentatPennState.We’realsoincludingYour Personal Estate Planning Record,whichwillhelpyouuncoverthevalueofyourestateandwhetheritwillbenefityourlovedonesinawayyouintend.

cost basis equal to the fair market value as of

the date of the deceased’s death, or, in some

cases, six months later.

Your�Next�StepReview your plans with your estate planning

attorney as soon as possible to determine if

anything needs to be updated.The�Charitable�IRA�Rollover�Is�Back!

If you are 701⁄2 or older, Congress recently passed legislation that once again allows you to make tax-free gifts using funds transferred directly from your IRAs to qualified charities like Penn State. You can transfer any amount up to $100,000 through the end of 2011.

How�This�Benefits�YouThe transfer generates neither taxable income nor a tax deduction, so you don’t have to itemize to take advantage of this opportunity. The transfer may also count against your unsatisfied required minimum distribution from your IRA. Contact us or visit our gift planning website to learn more.

YOUR�PERSONAL

Estate Planning RecordExtending YourPENN�STATE�PRIDE�FOREVER

Download a sample letter for your IRA administrator at www.giftplanning. psu.edu/forms.

WHAT�IT�TAKES

lasts forever.

scholarships:

TAX-SMART�WAYS

YOUR�PERSONAL

WHAT�IT�TAKES

lasts forever.

scholarships:

TAX-SMART�WAYS

YOUR�PERSONAL

for 2011

to honor her.”

65� 70� 75� 80� 85� 90+Age

e 9.5%

5.5% 5.8%6.4%

7.2%8.1%

future students.”

Antony Palocaren

Stephen S. Showers

for 2011

to honor her.”

65� 70� 75� 80� 85� 90+Age

e 9.5%

5.5% 5.8%6.4%

7.2%8.1%

future students.”

Antony Palocaren

Stephen S. Showers

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